Some business owners purchase plans that benefit them, however, they don’t necessarily benefit the employees. This sometimes reveals itself as an attraction and retention problem without knowing why. Failing to provide protective cover to fit employee needs can influence morale, attraction, and retention for years to come, if not solved. In this article, we’ll share a real-life story of a business that discovered a new win/win approach where both the employees and the business owners benefited.
Meeting your employee’s needs
When I first took on this client we looked at what they were currently doing and what could be done to improve. The client provided an HSA plan with a high deductible and covered the individual employee premium 100%; however, the deductible was over $6,000.
In the mind of the employees, they had no real benefit until that deductible was met. They were grateful that he was paying for that plan. However, they didn’t earn enough income to set $6,000 aside to where they could maximize that specific HSA plan for their benefit.
The business owner, like many business owners, is a high-income earner. For him, the HSA is beneficial because not only can he easily cover the deductible, but he can also offset paying a high tax bill.
The business owner doesn’t have an income problem, he has a tax problem. In other words - he pays a large sum each year in taxes.
The HSA health plan is a solution for this type of person.
Having a health savings account insurance plan allows you to set up a special savings account, where you can set aside a certain amount of money to the account each year - and it is a tax deduction. In 2022, it is $3,650 for an individual or $7,300 for a family.
However, this client has employees who are getting paid hourly. They don't make as much, probably $40,000 to $60,000 a year or less. Their biggest concern is whenever they need medical services, they don't want to pay full price for prescriptions and office visits. They would rather pay a copay. This problem was ultimately impacting his company's employee attraction and retention.
Indirectly, the plan was wasting money because it wasn't doing anything for his business. After explaining to him why the plan is good for him, but maybe not so good for everybody else, he was more open-minded about modifying coverage to suit his employee’s needs.
We kept the HSA option for him and we offered the employees the option to participate in a lower deductible plan with copays - with the business only covering 50% of the premium instead of 100%. When we did the enrollment: out of his eight employees, everyone chose the lower deductible plan except for him.
This can happen often because the needs between the business owners and the employees differ. Business owners can sometimes choose plans that work best for their situation, forgetting to consider what matters most to their employees. The good news is that the solution is simple. The benefit of putting plans into place with lower deductibles can have a direct impact on retention and attraction. This saves money, productivity, and training time, keeping employees happy and loyal for years to come.
For a complimentary guide on employee benefit programs, including options that don’t require the business to fund them, click here:
For a complimentary benefit audit, to ensure your getting the best value for your money, click here:
For a subsidy qualification checklist to determine eligibility for individual health insurance savings, click here: